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E7-21 (similar to) Question Help Smith Smith Enterprises manufactures tires for the Formula 1 motor racing...

E7-21 (similar to) Question Help Smith Smith Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017 2017​, it budgeted to manufacture and sell 3 comma 100 3,100 tires at a variable cost of $ 77 $77 per tire and total fixed costs of $ 53 comma 500 $53,500. The budgeted selling price was $ 108 $108 per tire. Actual results in August 2017 2017 were 2 comma 900 2,900 tires manufactured and sold at a selling price of $ 109 $109 per tire. The actual total variable costs were $ 240 comma 700 $240,700​, and the actual total fixed costs were $ 49 comma 500 $49,500. Read the requirements LOADING... . Requirement 1. Prepare a performance report that uses a flexible budget and a static budget. Begin with the actual​ results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable.​ (For variances with a​ $0 balance, make sure to enter​ "0" in the appropriate field. If the variance is​ zero, do not select a​ label.) Actual Results Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Enter any number in the edit fields and then click Check Answer. 3 parts remaining Clear All Check Answer

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Answer #1
1. Prepare a performance report that uses a flexible budget and a static budget

Actual Results

(Refer working note 1)

Flexible Budget Variances

Flexible Budget

(Refer working note 2)

Sales Volume Variance

Static Budget

(Refer working note 3)

(a) (a- b) (b) (b - c) (c)
Units sold 2900 2900 3100
Revenues $316,100 $2,900 F $313,200 $21,600 U $334,800
Variable costs $240,700 $17,400 U $223,300 $15,400 F $238,700
Contribution Margin $75,400 $14,500 U $89,900 $6,200 U $96,100
Fixed costs $49,500 $4,000 F $53,500 $0 $53,500
Operating Income $25,900 $10,500 U $36,400 $6,200 U $42,600

.

.

Working note 1 - Actual results
Actual units sold                                (a) 2900
Actual selling price per unit              (b) $109
Revenues                                         (a x b) $316,100
Less: Actual variable costs $240,700
Contribution margin $75,400
Less: Actual fixed cost $49,500
Operating Income $25,900

.

.

Working note 2 - Flexible budget
Actual units sold                                (a) 2900
Budgeted selling price per unit           (b) $108
Budgeted variable cost per unit          (c) $77
Revenues                                         (a x b) $313,200
Less: Flexible variable costs          (a x c) $223,300
Contribution margin $89,900
Less: Budgeted fixed cost $53,500
Operating Income $36,400

.

.

Working note 3 - Static budget
Budgeted units sold                            (a) 3100
Budgeted selling price per unit           (b) $108
Budgeted variable cost per unit          (c) $77
Revenues                                         (a x b) $334,800
Less: Budgeted variable costs        (a x c) $238,700
Contribution margin $96,100
Less: Budgeted fixed cost $53,500
Operating Income $42,600
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